Companies will see largely simplified sustainability reporting rules after EU lawmakers agreed on a final text to amend the EU Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive on Thursday. The vote was mainly backed by the center-right European People's Party and far-right lawmakers, after a compromise with traditional centrists parties was not possible to reach. The revised directives will now be negotiated with member states to become law.
The “omnibus” directive to simplify the bloc’s green-reporting and due-diligence rules was approved on Thursday after a tight plenary vote by EU lawmakers.
In a narrow vote, 382 lawmakers backed the proposal, while 249 opposed it and 13 abstained, meaning the law advances to the next stage of negotiations.
The new text revises the EU Corporate Sustainability Reporting Directive, or CS3D, and Corporate Sustainability Due Diligence Directive which require companies operating in the EU to report on their environmental, social and governance activities and show they are addressing and minimizing impacts on the environment as well as preventing human rights abuses.
The new version adjusts thresholds for companies covered by CS3D which should only now apply to firms with more than 5,000 employees and a net annual revenue of €1.5 billion ($1.7 billion). It drops civil liability provisions and removes the requirement for large firms to publish climate-transition plans, which had been a major sticking point in previous negotiations.
The vote followed two weeks of intense talks led by Swedish center-right lawmaker Jörgen Warborn, who negotiated until Wednesday evening with centrist parties and the far right in search of a workable majority. In the end, he allied with the European Conservatives and Reformists and the far-right Patriots for Europe to steer the proposal through the chamber.
Last month, lawmakers unexpectedly rejected Warborn’s proposal due to divisions between the centrist Renew Europe group, the center-left Socialists & Democrats left and the center-right European People’s Party, with several S&D member voting against the text.
The defeat derailed parliament’s first attempt to adopt a position on the file, forcing a return to the drawing board.
The October vote was one of the narrowest of the parliamentary term and exposed deep rifts over the future of the EU’s green agenda. Progressive lawmakers accused the EPP of using the simplification package to roll back the bloc’s flagship Corporate Sustainability Reporting Directive, or CS3D, and Corporate Sustainability Due Diligence Directive, prompting calls for a revised, more balanced text.
"A sad day for Europe and for the stability of our European democracy," said Renew lawmaker Pascal Canfin in a statement on Wednesday evening, after realizing a compromise with the EPP would have been impossible.
This would be the first time that a legislative text goes into inter-institutional negotiations with an alliance between the EPP and the far-right groups, he said.
— Next steps —
The vote result gives lawmakers of the judicial committee a mandate for final negotiations with EU governments to fine tune the last version of the law.
The Council of the EU, representing body of the bloc’s member states, adopted its stance in June, supporting a narrower scope for both directives — limiting CS3D obligations to companies with more than 5,000 employees and €1.5 billion in revenue, and restricting sustainability-reporting duties to firms above 1,000 employees and €450 million in turnover.
EU governments’ position has kept the plan to scrap an EU-wide civil liability regime, leaving rules to member states — a move intended to reduce legal risks but criticized by EU civil and environmental groups for weakening companies’ accountability and increasing legal uncertainty. It also eased climate-plan rules, limiting them to mitigation targets and delaying their adoption by two years.
Press release here.
Source: MLex / EUP Press Release
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